When is disclosure economically desirable?
A contract can contain information that is valuable to both the signing parties and outsiders. Sometimes the law requires that certain facts be disclosed in it. Disclosure is economically desirable where a failure to disclose would reduce the economic value the agreement can produce. As an example, if you put a house on the market you must generally inform potential buyers that it has structural defects or is infested by termites. A buyer with this information is in a better position to determine its suitability than one without it.
You might also like to view...
Economic growth could make a country worse off
Indicate whether the statement is true or false
The value of real GDP in the current year equals
A) the value of current-year output in prices of the base year. B) the value of current-year output in prices of the current year. C) the value of base-year output in prices of the base year. D) the value of base-year output in prices of the current year.
A monopoly or group of firms acting together as a monopoly
a. cannot perform the economic task of resource allocation b. allocates resources in the most efficient way possible c. misallocates resources by producing more output than a competitive industry would d. misallocates resources by producing where the marginal benefit of the final unit produced exceeds its marginal cost e. misallocates resources by producing where the marginal benefit of the final unit produced is less than its marginal cost
On Naomi's pig farm, Naomi hires all the labor used, grows all the grain fed to the pigs, and owns the barn. The costs used to calculate the total cost curve include
a. only the cost of labor. b. only the cost of labor and the cost of grain, which is completely consumed in the period in which it is grown. c. only the variable cost of growing grain. d. the cost of labor, the cost of growing grain, and the opportunity cost of the barn.